Zeev's Turnips Patch-No Politics (ZEEV)

[Bearmove]

By Igor Greenwald
Of SMARTMONEY.COM

Who says capital spending is dead?

Sure, Intel (INTC) is cutting its investment plans, and Sun Microsystems (SUNW) has been sucking fumes for two years. But in San Diego's Mission Valley, a whole new city financed by corporate America has risen in the shadow of Qualcomm Stadium, site of Sunday's Super Bowl.
Well, OK, the city modestly bills itself as a Corporate Hospitality Village, and its buildings are really just big tents. For all that, it's still a fair bet that this is one village capable of accommodating refugees from a medium-sized war.
The natives, after all, like to live large. Two years into the earnings bust and a mere year since Enron hit the fan, there are still executives who don't think that $500 Super Bowl tickets alone cut it. Maybe they want to nosh on the Pistachio Crusted Sides of Salmon at the pregame spread in the Stadium Club. Perhaps they crave the personal attention dispensed at "an exclusive security entrance" to the stadium. Heck, they might scare up some business in the relative seclusion of a private tent designed to "promote their corporate identity."
I'm not here to question these people's motives or the way they spend their tax-deductible entertainment budgets. I'm merely here to suggest that on Sunday, as you crunch your way through a bag of generic potato chips, you should say a prayer for all the businessmen enjoying the open-bar conviviality of those tents. Because if they're crying in their beer - or, worse, if they don't show up at all - it's likely to be another long year for the stock market.
Some silly bit of Wall Street lore attempts to handicap stocks' prospects based on the outcome of the Big Game, be it an NFC win or an AFC triumph. Such gimmicks aside, the Super Bowl is a useful business indicator in two ways. First, it is the premier showcase for new marketing messages targeting a national audience. Second, it is the marquee corporate entertainment ticket, and as such offers insights into the current fragile state of the boardroom psyche.
And fragile it is. Locals with rooms to rent aren't making out like they used to, reports the hometown San Diego Union-Tribune. The National Football League reserved a big block of hotel space for its clients, then dumped an unexpectedly large portion back onto a flooded market.
The Buccaneers-Raiders match-up won't help, since San Diego weather likely won't lure as many fans from toasty Tampa and temperate Oakland as would have come from freezing Philadelphia and icy Nashville.
Times are tough all over. Caterers are catering fewer and more modest functions than they did the last time the NFL carnival came to San Diego, in 1998. Corporate revelers are more likely to hire a local band instead of a more expensive national act, says Deborah K. Wardrop, an NFL executive who oversees hospitality sales. "They are not as lavish as in the past," she says of this year's parties. "People are being careful about how they spend their money."
On the other hand, hospitality sales have been running well above the pace of last year's Super Bowl, when terrorism fears and economic worries kept the high rollers away from New Orleans. Last year, demand was so poor that some scalpers ended up dumping Super Bowl tickets at a loss in the final hour before kickoff, a telling indicator of the lousy year that followed for business investment and the stock market.
Some perspective is in order: Pro football is weathering the current economic cold spell a lot better than most other major sports. Two National Hockey League teams are in bankruptcy. The market for free-agent baseball players is undergoing a Nasdaq-like deflation this winter. Whereas by the middle of last week, a semblance of Super Bowl normality was restored, with a Comfort Inn offering a minimum four-night room rental at $169 per diem.
They need to gouge someone in San Diego, where the economic climate is not as balmy as the ocean breezes. For a while last week, the Union-Trib's homepage led with this news: "San Diego imposes an immediate hiring freeze as the city manager warns that layoffs of police, firefighters and other city workers are almost inevitable under Gov. Gray Davis' budget plans."
Unfortunately for the locals, they've already had to dub this "the fans' Super Bowl," as distinct from the traditional "soak-the-fat-cats" variety. The fat cats are lying low. Qualcomm (QCOM), the wireless tech supplier and top local company, already has its name plastered on the stadium. It felt no need to get involved in other ways, beyond sponsoring a couple of do-good projects tying local schools to the event.
Why should you care? Because bosses unwilling to spend an odd million on the biggest corporate bash of the year probably lack the confidence to throw the odd billion at the next hot investment opportunity, even if one turns up. And without an increase in business investment, corporate America will remain on course for profit growth of a sort that will keep bond yields looking attractive.
I was encouraged for a while to discover that Home Depot (HD) and Gateway (GTW) took some time out from causing their shareholders grief to sponsor San Diego's Super Bowl Host Committee. But it turns out that Gateway, at least, scaled back a more ambitious sponsorship plan in favor of donating a few personal computers out of the surplus piling up at its stores.
The good news is that a few bosses are still willing to spend millions to reach a mass consumer audience. Walt Disney's (DIS) ABC network should have an easier time selling its last few remaining late-game ad spots than a worried Fox (FOX) did last year. Rates are up some 10% to an average of $2.1 million per 30-second spot, tying a record set back in 2000, according to AdAge.com.
Ah, but how the advertisers have changed. Those cat wranglers from EDS (EDS) have suffered so many scratches, they are out of the picture. The dancing E*Trade (ET) monkey went off to mourn the Pets.com sock puppet. Taking up their slack in a continuation of last year's trend will be the staid purveyors of cola, beer, movies and other items that won't bust your budget, plus the occasional interest-free car that might.
On Sunday, Michael Jordan will pitch PepsiCo's (PEP) Gatorade by playing basketball against his younger self, then team up with Jackie Chan to plug new Hanes tagless t-shirts for Sara Lee (SLE). Reluctant taxpayer Willie Nelson will represent H&R Block (HRB).
Two venerable brands will attempt belated makeovers against all odds, as Cadillac flogs its new XLR roadster and Levi's attempts to restore its fading market share by rolling out fashion-forward Type1 jeans.
For reasons that are hard to grasp, two online job boards, TMP Worldwide's (TMPW) Monster.com and Yahoo's (YHOO) HotJobs.com, are still throwing money at the black hole that is the labor market. AdAge.com, the source of the sneak previews above, gets to the point on the HotJobs ad's angle: "With the economy in the tank and the war looming, ad will be 'optimistic, sensitive and inspirational.'"
Consider me inspired.
-For more information and analysis of companies and mutual funds, visit SmartMoney.com at http://www.smartmoney.com/.